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ASTEA INTERNATIONAL INC.
1,500,000 SHARES
COMMON STOCK
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This Prospectus relates to the resale of up to an aggregate of 1,500,000
shares of Common Stock, $.01 par value per share (the "Shares"), of Astea
International Inc. ("Astea" or the "Company") which were issued to the
stockholders (the "Selling Stockholders") of Bendata, Inc. ("Bendata") in
connection with the Company's merger with Bendata. The Shares may be sold from
time to time by the Selling Stockholders in brokers' transactions, to market
makers or in block placements, at market prices prevailing at the time of sale
or at prices otherwise negotiated. See "Selling Stockholders" and "Plan of
Distribution."
The Company will not receive any of the proceeds from the sale of the Shares
being sold by the Selling Stockholders. The Company has agreed to bear the
expenses incurred in connection with the registration of the Shares. The
Selling Stockholders will pay or assume brokerage commissions or similar
charges incurred in the sale of the Shares. The Company has agreed to
indemnify the Selling Stockholders against certain liabilities, including
liabilities under the Securities Act.
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "ATEA." On September 20, 1996, the last reported sale price of the
Common Stock was $6 1/32 per share, as reported by the Nasdaq National Market.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 4.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURI-
TIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 23, 1996.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information are available for inspection and copying at
the public reference facilities maintained by the Commission at 450 5th
Street, N.W., Washington, D.C. 20549, and at the following regional offices of
the Commission: Seven World Trade Center, 13th Floor, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 5th Street, N.W., Washington, D.C.
20549 at prescribed rates. The Commission maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding the Company. The address of such site on the World Wide Web is:
http://www.sec.gov. The Common Stock of the Company is quoted on The Nasdaq
National Market and such material may also be inspected and copied at the
offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 (including all amendments thereto, the "Registration Statement") under the
Securities Act, with respect to the Common Stock offered hereby. This
Prospectus does not contain all information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information regarding the Company
and the Common Stock offered hereby, reference is hereby made to the
Registration Statement and to the exhibits and schedules filed therewith.
Statements contained in this Prospectus regarding the contents of any
agreement or other document filed as an exhibit to the Registration Statement
are not necessarily complete, and in each instance reference is made to the
copy of such agreement filed as an exhibit to the Registration Statement, each
such statement being qualified in all respects by such reference. The
Registration Statement, including the exhibits and schedules thereto, may be
inspected at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and copies of all or
any part thereof may be obtained from such office upon payment of the
prescribed fees.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission pursuant to
the Exchange Act are incorporated in this Prospectus as of their respective
dates (File No. 0-26330):
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995.
2. The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1996.
3. The Company's Current Report on Form 8-K dated as of February 27, 1996
regarding the Company's merger with Bendata and certain affiliated
entities.
4. The Company's Current Report on Form 8-K/A (Amendment No. 1 to Form 8-K
dated as of February 27, 1996) dated as of May 2, 1996, including pro
forma financial statements in connection with the Company's merger with
Bendata and certain affiliated entities.
5. The Company's Current Report on Form 8-K dated as of July 12, 1996
regarding the Company's acquisition of Abalon AB and certain affiliated
entities.
6. The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1996.
7. The Company's Current Report on Form 8-K/A (Amendment No. 1 to Form 8-K
dated as of July 12, 1996) dated as of September 11, 1996 regarding the
Company's acquisition of Abalon AB and certain affiliated entities.
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8. The description of the Company's Common Stock, $.01 par value per share,
contained in the Registration Statement on Form 8-A filed under the
Exchange Act and declared effective on July 26, 1995, including any
amendment or report filed for the purpose of updating such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to
termination of the offering of the Shares, shall be deemed to be incorporated
by reference in this Prospectus and made a part hereof from the date of filing
of such documents.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein or in any Prospectus
Supplement modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person whom a Prospectus is
delivered, on the written or oral request of any such person, a copy of any or
all of the documents incorporated by reference herein (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents). Written requests for such copies should be directed to
Astea International Inc., Attention: Leonard W. von Vital, Chief Financial
Officer. Telephone requests may be directed to Leonard W. von Vital at (215)
682-2500. Unless the context requires otherwise, references in this Prospectus
to the "Company" or "Astea" refer to Astea International Inc. and its
subsidiaries.
TRADEMARKS
Astea International(TM), the Astea logo, ACES(TM), Astea(TM), DISPATCH-1(TM),
FLS(TM), HEAT(TM), HEATLINK(TM) and PowerSales(TM) are unregistered trademarks
of the Company. The Company has filed United States trademark applications for
PowerSales, Servlink, Astea, PowerService, AsteaObjects, PowerSupport and Astea
(stylized). The Company has a registered trademark for Dispatch-Plus(R),
PowerHelp(R), SellPlan(R) and Xancus(R). This Prospectus also includes trade
names and trademarks of entities other than the Company.
THE COMPANY
Astea develops, markets and supports a suite of applications for the customer
interaction software market. The Company's flagship product, DISPATCH-1, helps
organizations with complex and geographically dispersed field service
operations automate and manage call center operations among customers,
headquarters, branch offices and the field. The Company's PowerHelp product is
a flexible solution designed for telephone-based and on-line external customer
support operations. With PowerHelp's multimedia capabilities, Astea's client
organizations can automate, diagnose and resolve customer support problems
using graphics, video, audio, scanned images and animation to facilitate
problem diagnosis and resolution. PowerSales, which is currently under
development, is a sales opportunity management application for mobile and home-
office sales personnel requiring remote and local access to customer and
enterprise information.
In February 1996, the Company merged with Bendata, a provider of internal
help desk software products and related services. Bendata's HEAT family of
software applications provide a flexible and customizable problem management
solution for automating an organization's internal help desk operations. In
June 1996, the Company acquired Abalon AB ("Abalon"), a Swedish company which
develops and markets sales force automation products for the customer
interaction software market.
The Company was incorporated in Pennsylvania in 1979 under the name of
Applied System Technologies, Inc., and in 1992, the Company changed its name to
Astea International Inc. In May 1995, the Company
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reincorporated in Delaware. The Company's principal executive offices are
located at 455 Business Center Drive, Horsham, PA 19044 and its telephone
number is (215) 682-2500.
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
shares of Common Stock offered hereby.
DEPENDENCE ON PRINCIPAL PRODUCT. In each of 1993, 1994 and 1995, more than
90%, 67% and 71%, respectively, of the Company's total revenues were derived
from the licensing of DISPATCH-1 and the provision of professional services in
connection with the implementation, deployment and maintenance of DISPATCH-1
installations. The Company's future success will depend in part on its ability
to reduce its reliance on revenues generated by DISPATCH-1, by increasing
licenses of PowerHelp, the HEAT products, the Abalon products and other
offerings, and developing new products and product enhancements, such as
PowerSales, the Company's planned sales force automation product currently
under development, to complement its existing field service and customer
support offerings. There can be no assurance that the Company will be able to
successfully introduce PowerSales or develop any new products and product
enhancements in order to increase sales of other products and reduce its
reliance on licenses of DISPATCH-1 and related professional services revenue.
As a result, any factor adversely affecting DISPATCH-1 licenses or related
services would have a material adverse effect on the Company's business and
results of operations.
DEPENDENCE ON LARGE LICENSE FEE CONTRACTS AND CONCENTRATION OF CUSTOMERS. The
Company's revenues are dependent, in important part, on large license fee
contracts from a limited number of customers. In 1995, one customer accounted
for more than 19% of the Company's total revenues. In 1994, there were no
customers which accounted for more than 10% of the Company's total revenues. In
1993, two customers each accounted for more than 10% of the Company's total
revenues. In 1993, 1994 and 1995, approximately 37%, 31% and 37%, respectively,
of the Company's total revenues were attributable to five or fewer clients. The
Company believes that revenue derived from current and future large customers
will continue to represent a significant proportion of its total revenues. The
loss of, or reduced demand for products or related services from, any of the
Company's major customers could have a material adverse effect on the Company's
business and results of operations.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS MAY BE SIGNIFICANT. The Company's
quarterly operating results have in the past varied significantly and are
likely to vary significantly in the future depending on factors such as the
size and timing of revenue from significant orders, the recognition of revenue
from such orders, the timing of new product releases and market acceptance of
these new releases, increases or other changes in operating expenses, the level
of product and price competition, the seasonality of its business and general
economic factors. The timing and size of licenses for new orders has in the
past varied significantly from quarter to quarter. As a result of the
application of the revenue recognition rules applicable to the Company's
licenses under generally accepted accounting principles, the Company's license
revenues may be recognized in periods after that in which the respective
licenses were signed. The Company believes that the concentration of business
activity in specific quarterly periods is also affected by customers' buying
patterns and budgeting cycles, as well as general economic factors. Thus, the
Company's results of operations may vary seasonally in accordance with
licensing activity or otherwise, and will also depend upon its recognition of
revenue from such licenses from time to time. Due to the relatively fixed
nature of certain of the Company's costs throughout each quarterly period,
including personnel and facilities costs, a decline of revenues in any quarter
typically results in lower profitability in that quarter. In addition, as a
result of the merger with Bendata and the Abalon acquisition, the difficulty of
integrating several businesses, including their respective products, services
and personnel, may increase the likelihood of fluctuations in quarterly
operating results in future periods. There can be no assurance that the Company
will be profitable or avoid losses in any future period, and the Company
believes that period-to-period comparisons of its results of operations are not
necessarily meaningful and should not be relied upon as any indication of
future performance.
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LARGE CONTRACTS MAY RESULT IN LENGTHY SALES AND IMPLEMENTATION CYCLES. The
sale and implementation of the Company's DISPATCH-1 product generally involve
a significant commitment of resources by prospective customers. The Company
expects that license fees and implementation services for DISPATCH-1 will
continue to increase in size and the implementation of the Company's products
will become more complex as DISPATCH-1 is used to manage larger and more
geographically dispersed installations. As a result, the Company's sales
process often is subject to delays associated with lengthy approval processes
attendant to significant capital expenditures, definition of special customer
implementation requirements, and extensive contract negotiations with the
customer. The sales cycle associated with the license of the Company's
products varies substantially from customer to customer and typically lasts
between six and nine months, during which time the Company may devote
significant time and resources to a prospective customer, including costs
associated with multiple site visits, product demonstrations and feasibility
studies, and the Company may experience a number of significant delays over
which the Company has no control. Because of the longer sales cycle, the
revenues anticipated from any particular project may be postponed to future
periods, even though the costs associated with the sale of the product are
fixed in current periods, resulting in timing differences between incurrence
of costs and recognition of revenue associated with a particular project. Any
significant or ongoing failure by the Company ultimately to achieve such sales
of the DISPATCH-1 product, and any significant delay in the recognition of
revenues from such sales, could have a material adverse effect on the
Company's business, operating results and financial condition. In addition,
following the initial sale, the implementation of DISPATCH-1 typically
involves several months for customer training and integration of the DISPATCH-
1 product with the customer's other existing systems. A successful
implementation requires a close working relationship between the customer and
members of the Company's professional service organization who assist in the
process, and delays frequently arise in completing the implementation
services. Because of the implementation requirements of a particular customer,
revenues associated with any project may not be booked in the period in which
the contract is signed, resulting in a deferral of revenue over a longer
period of time. The Company incurs significant current personnel costs
associated with these implementation services, resulting in timing differences
between incurrence of costs and recognition of revenue on some of its larger
projects for its DISPATCH-1 product. There can be no assurance that delays in
the conclusion of customer contracts as well as the implementation process of
DISPATCH-1 for any given customer will not have a material adverse effect on
the Company's business, operating results and financial condition. Based upon
all of the foregoing, the Company believes that there can be no assurance that
the Company will be profitable or avoid losses in any future period, and the
Company believes that period-to-period comparisons of its results of
operations should not be relied upon as any indication of future performance.
COMPETITION IN THE CUSTOMER INTERACTION SOFTWARE MARKET IS INTENSE. The
customer interaction software market is intensely competitive. The Company's
competitors include Clarify, Remedy, Scopus, Vantive, and a number of smaller
privately-held companies which generally focus only on discrete areas of the
customer interaction software marketplace. In the field service marketplace,
the Company's principal competition comes from numerous small, privately-held
companies. In the external customer support market, certain competitors of the
Company are more established and benefit from greater market or name
recognition. In the internal help desk market, the Company faces significant
competition from certain well established private and public companies.
Because the barriers to entry in the customer interaction software market are
relatively low, new competitors may emerge with products that are superior to
the Company's products in performance, functionality or ease-of-use, or that
achieve greater market acceptance. The Company believes that there already
exist well-established competitors for the Company's proposed PowerSales
offering and the Abalon products. Increased competition is likely to result in
price reductions, reduced gross margins and loss of market share, any of which
could materially adversely affect the Company's business and results of
operations. The Company's future success will depend in large part upon its
ability to attract new customers, license additional products, and deliver
product enhancements and professional services to existing and new customers.
There can be no assurance that future competition will not have a material
adverse effect on the Company's business and results of operations.
FAILURE TO INTEGRATE VARIOUS PRODUCT OFFERINGS. The Company believes that
significant market opportunities exist for a provider of fully integrated
field service, customer support and sales force automation software. One of
the Company's business strategies is to fully integrate its DISPATCH-1,
PowerHelp and
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PowerSales product offerings. PowerSales is currently under development, and to
date, the Company has experienced delays in integrating PowerSales with its
other product offerings due in part to delays in the availability and
development of third party developmental tools. There can be no assurance that
such tools will become available in a timely fashion, or that, if available,
the Company will be successful in integrating PowerSales with its other product
offerings. In addition, as a result of its merger with Bendata and acquisition
of Abalon in the first half of 1996, the Company acquired both Bendata's HEAT
products and Abalon's SellPlan marketing and sales automation products. There
can be no assurance that the Company will be able to fully integrate its field
service, customer support and sales force and marketing applications, including
the HEAT and SellPlan products, or that achieving such integration will enable
the Company to improve its competitive position in the customer interaction
software market. The Company's inability to further integrate its products
could have a material adverse effect on the Company's business and results of
operations.
MARKET ACCEPTANCE. Continued acceptance of Astea's products by existing and
potential customers is critical to the success of the Company's overall
strategy of increasing its penetration of the field service and external
customer support markets and entering the sales force automation market. The
Company believes that a number of factors will determine such acceptance:
product performance, ease of adoption, migration from host-based to
client/server computing environments and interoperability with diverse hardware
platforms, network servers and databases. Any failure of the Company's products
to achieve or sustain market acceptance, or of the Company to sustain its
current position in the field service market, would have a material adverse
effect on the Company's business and results of operations.
DEPENDENCE ON GROWTH OF CLIENT/SERVER COMPUTING ENVIRONMENT. DISPATCH-1 is
designed for use by organizations employing either host-based or client/server
computing solutions, and PowerHelp, PowerSales the HEAT products and the Abalon
products are designed for use by organizations employing client/server
computing solutions. The Company's business strategy assumes that the market
for the Company's products will expand as businesses migrate from host-based to
client/server computing environments. The Company's future results of
operations will depend in large part on continued growth in the number of
organizations adopting client/server computing solutions and the development of
applications for use in those environments. The Company's future financial
performance also will depend in large part on the continued reliance on third
party vendors such as Astea for client/server software applications. There can
be no assurance that the client/server computing trends anticipated by the
Company will occur or that the Company will be able to respond effectively to
the evolving requirements of this market. If the client/server market fails to
grow or grows more slowly than management anticipates, the Company's business
and results of operations would be materially adversely affected.
RAPID TECHNOLOGICAL CHANGE; DEVELOPMENT OF NEW PRODUCTS. The client/server
application software market is subject to rapid technological change, frequent
new product introductions and evolving technologies and industry standards that
may render existing products and services obsolete. While the Company is not
aware of any emerging products that are likely to render its existing products
obsolete, there can be no assurance that the Company's products could not
suffer such obsolescence.
Because of the rapid pace of technological change in the application software
industry, the Company's current market position in field services, external
customer support or other markets that it may enter could be eroded rapidly by
product advancements. The Company's application environment relies primarily on
software development tools from Progress Software Corporation and PowerSoft
Corporation, a subsidiary of Sybase. If alternative software development tools
were to be designed and generally accepted by the marketplace, the Company
could be at a competitive disadvantage relative to companies employing such
alternative developmental tools. In addition, the Company's products must keep
pace with technological developments and conform to evolving technologies and
standards, including developments within the client/server computing
environment, and must address increasingly sophisticated customer needs. Such
developments may require, from time to time, substantial capital investments by
the Company in product development and testing. The Company intends to continue
its commitment to research and development and its efforts to develop new
products and product enhancements. There can be no assurance that the Company
will have sufficient resources to make the
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necessary investments. Also, there can be no assurance that the Company will
not experience difficulties that could delay or prevent the successful
development, introduction and marketing of new products and product
enhancements, that new products and product enhancements will meet the
requirements of the marketplace and achieve market acceptance, or that the
Company's current or future products will conform to industry requirements.
Certain of the Company's clients request customization of the Company's
software products to address unique characteristics of their businesses or
computing environments. The Company's commitment to customization could place a
burden on the Company's client support resources or delay the delivery or
installation of products which, in turn, could materially adversely affect the
Company's relationship with significant clients or otherwise adversely affect
its business and results of operations. In addition, the Company could incur
penalties or reductions in revenues for failures to develop or timely deliver
new products or product enhancements under development agreements and other
arrangements with customers.
RISKS ASSOCIATED WITH INTERNATIONAL SALES. Prior to 1995, the Company derived
no significant revenues from international operations. In 1995, international
sales represented approximately 21% of the Company's total revenues. Since
1994, the Company has established international offices in Australia, New
Zealand, the United Kingdom, France, Germany, The Netherlands, Hong Kong,
Israel and Singapore. With the merger with Bendata in February 1996, the
Company added an office in Swindon, England consisting of 21 employees. With
the acquisition of Abalon in June 1996, the Company added an office in Bromma,
Sweden consisting of 58 employees. The Company also has international
distributors located in Australia, New Zealand, Canada, Stockholm, The
Netherlands, Israel, Japan and South Africa. The Company expects that
international sales will continue to be a significant and growing component of
its business. The Company believes that international expansion is desirable
because of the potential size of the overseas market and the increasing
tendency of companies to require global computing capability. International
sales are subject to a variety of risks, including difficulties in establishing
and managing international distribution channels and in translating products
into foreign languages. International operations also encounter difficulties in
collecting accounts receivable, staffing and managing personnel and enforcing
intellectual property rights. Other factors that can also adversely affect
international operations include fluctuations in the value of foreign
currencies and currency exchange rates, changes in import/export duties and
quotas, introduction of tariff or non-tariff barriers, potentially adverse tax
consequences, possible recessionary environments in economies outside the
United States, and economic or political changes in international markets. In
addition, as the Company increases its international sales, its total revenues
may also be affected to a greater extent by seasonal fluctuations resulting
from lower sales that typically occur during the summer months in Europe and
other parts of the world.
DEPENDENCE ON LICENSED TECHNOLOGY. The Company's proposed PowerSales
offering, which is currently under development, is licensed from a small,
privately-held third party under a reciprocal license agreement pursuant to
which the Company has licensed PowerHelp to such third party. During the
initial three-year period under the reciprocal license agreement, the Company
is permitted to market PowerSales only in connection with its other products
and is restricted from transferring rights to the source code. After the
expiration of such three-year period, the Company has the right to modify and
use PowerSales on a nonexclusive basis and without restriction.
Under the reciprocal license agreement, the third party has all of the same
rights and obligations with respect to Astea's PowerHelp product that Astea has
with respect to the PowerSales product owned by the third party. For example,
it has the right, during the term of the agreement, to reproduce, develop,
market, sublicense, sell and distribute Astea's PowerHelp product, in exchange
for the payment of royalties to Astea. The third party also has the right to
acquire from Astea at a fixed price a perpetual, nonexclusive license to
PowerHelp, including full rights to the PowerHelp source code. The third
party's rights under the agreement to Astea's PowerHelp product are
transferable in connection with a sale of the third party.
The Company does not believe that the restrictions on the use of PowerSales
during the three-year period will adversely affect its ability to develop and
market PowerSales or that the third party's rights to PowerHelp will adversely
affect the Company because of the Company's reputation, sales and marketing
expertise and the relative size of and number of competitors in the external
customer support market. There can be no assurances,
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however, that the restrictions in the agreement will not hinder the Company's
marketing of PowerSales or that the third party's products derived from
PowerHelp and PowerSales will not compete successfully with the Company's
products. The Company believes that the cost associated with the license of the
PowerSales software is not material to its results of operations.
MANAGEMENT OF GROWTH. The Company has recently experienced rapid growth and
expansion, including through its recent merger with Bendata and acquisition of
Abalon, which has placed, and will continue to place, a significant strain on
its administrative, operational and financial resources and increased demands
on its systems and controls. This growth has resulted in a continuing increase
in the level of responsibility for existing management personnel and the hiring
of significant new management personnel. For example, two of the Company's
current seven executive officers recently joined the Company in April 1996. The
Company is still in the process of integrating these new officers into its
senior management team. The Company anticipates that any continued growth will
require it to recruit and hire a substantial number of new employees,
particularly professional services and sales and marketing personnel, as well
as development engineers. There can be no assurance that the Company will be
successful in hiring, integrating or retaining such personnel. The Company's
ability to manage its growth successfully will require the Company to continue
to expand and improve its operational, management and financial systems and
controls. Any inability of the Company to manage growth effectively, hire and
integrate necessary personnel, as well as integrate the sales and marketing
organizations of the Company and its Bendata subsidiary as required could have
a material adverse effect on the Company's business and results of operations.
RISKS ASSOCIATED WITH MERGERS AND ACQUISITIONS. The Company merged with
Bendata in March of 1996 and acquired Abalon in June of 1996. The successful
integration of the Company's business with the businesses of Bendata and Abalon
is important for the future financial performance of the combined company.
Because Bendata's and Abalon's products are primarily targeted to different
segments of the customer interaction software market than that served by the
Company in the past, the process of integration may require adaptation in the
Company's operating methods and strategies. In addition, failure of the Company
to adequately integrate certain key employees of Bendata and Abalon into the
Company's business could have a material adverse effect on the Company's
business and results of operations.
Management may from time to time consider other acquisitions of assets or
businesses that will enable the Company to acquire complementary skills and
capabilities, offer new products, expand its customer base or obtain other
competitive advantages. There can be no assurance that the Company will be able
to successfully identify suitable acquisition candidates, obtain financing on
satisfactory terms, complete acquisitions, integrate acquired operations into
its existing operations or expand into new markets. Acquisitions may result in
potentially dilutive issuances of equity securities, the incurrence of debt and
contingent liabilities, and amortization expense related to intangible assets
acquired, any of which could materially adversely affect the Company's business
and results of operations. Acquisitions, including the Company's recent
acquisitions of Bendata and Abalon, involve a number of potential risks,
including difficulties in the assimilation of the acquired Company's operations
and products, diversion of management's resources, uncertainties associated
with operating in new markets and working with new employees and customers, and
the potential loss of the acquired company's key employees. There can also be
no assurance that the Bendata and Abalon acquisitions and future acquisitions,
if any, will not have a material adverse effect upon the Company's business and
results of operations. Once integrated, acquired operations may not achieve
levels of revenues, profitability or productivity comparable to those achieved
by the Company's existing operations, or otherwise perform as expected. The
Company is not currently engaged in negotiations with respect to any
acquisition and does not currently have any agreements, arrangements or
understandings with respect to any particular acquisition.
DEPENDENCE ON KEY PERSONNEL. The Company's success to date has been largely
dependent upon the skills and efforts of Zack B. Bergreen, its founder,
President and Chief Executive Officer, and other key officers and employees.
None of the senior management or other key employees of the Company is subject
to any employment contract. The loss of services of any of its officers or
other key personnel could have an adverse effect on the operations of the
Company. While none of the Company's executive officers is a party to an
employment agreement, the Company is a party to non-competition agreements with
each of its executive
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officers, other than Mr. Bergreen. The laws governing such agreements are in
continual flux, however, and the enforceability of such agreements in each
jurisdiction in which enforcement might be sought is uncertain. The inability
of the Company to hire talented personnel or the loss of key employees could
have a material adverse effect on the Company's business and results of
operations.
COMPETITION FOR EMPLOYEES. The future success of the Company will depend in
large part on its ability to attract and retain talented and qualified
employees, including highly skilled management personnel. Competition in the
recruiting of highly-qualified personnel in the software industry is intense.
From time to time the Company has experienced difficulty in recruiting talented
and qualified employees, particularly for its professional services
organization. The Company's inability to recruit additional professional
services or other necessary personnel could have a material adverse effect on
the Company's business and results of operations. There can be no assurance
that the Company will be able to attract, motivate and retain personnel with
the skills and experience needed to successfully manage the Company's business
and operations.
CONCENTRATION OF OWNERSHIP. Zack B. Bergreen, the Company's President and
Chief Executive Officer, as of June 30, 1996, beneficially owned approximately
52% of the outstanding Common Stock of the Company. As a result, Mr. Bergreen
may exercise significant control over the Company through his ability to
influence and, under certain circumstances, control, the election of directors
and all other matters that require action by the Company's stockholders. Under
certain circumstances, Mr. Bergreen could prevent or delay a change of control
of the Company which may be favored by a significant portion of the Company's
other stockholders, or cause a change of control not favored by the majority of
the Company's other stockholders. Mr. Bergreen's ability under certain
circumstances to influence, cause or delay a change in control of the Company
also may have an adverse effect on the market price of the Company's Common
Stock.
DEPENDENCE ON PROPRIETARY TECHNOLOGY. The Company's success is heavily
dependent upon proprietary technology. The Company's products are licensed to
customers under signed license agreements containing, among other things,
provisions protecting against the unauthorized use, copying and transfer of the
licensed program. In addition, the Company relies on a combination of trade
secret, copyright and trademark laws and non-disclosure agreements to protect
its proprietary rights in its products and technology. There can be no
assurance that such measures are adequate to protect the Company's proprietary
technology. In addition, there can be no assurance that the Company's
competitors will not independently develop technologies that are substantially
equivalent or superior to the Company's technologies.
In addition, although the Company believes that its products and technologies
do not infringe on any existing proprietary rights of others, and although
there are no pending lawsuits against the Company regarding infringement of any
existing patents or other intellectual property rights or any notices that the
Company is infringing the intellectual property rights of others, there can be
no assurance that such infringement claims will not be asserted by third
parties in the future. If any such claims are asserted, there can be no
assurance that the Company will be able to defend such claim or obtain licenses
on reasonable terms. The Company's involvement in any patent dispute or other
intellectual property dispute or action to protect trade secrets and know-how
may have a material adverse effect on the Company's business and results of
operations. Adverse determinations in any litigation may subject the Company to
significant liabilities to third parties, require the Company to seek licenses
from third parties and prevent the company from manufacturing and selling its
products. Any such situations can have a material adverse effect on the
Company's business and results of operations.
POSSIBLE VOLATILITY OF STOCK PRICE. The market price of the Common Stock
could be subject to significant fluctuations in response to, and may be
adversely affected by, variations in quarterly operating results, changes in
earnings estimates by analysts, developments in the software industry, adverse
earnings or other financial announcements of the Company's customers and
general stock market conditions as well as other factors. In addition, the
stock market has experienced extreme price and volume fluctuations from time to
time which have, in certain circumstances, borne no meaningful relationship to
performance.
SHARES ELIGIBLE FOR FUTURE SALE. Sales of substantial numbers of shares of
the Company's Common Stock in the public market or the perception that such
sales could occur could adversely affect the market price of the Common Stock.
9
<PAGE>
ANTI-TAKEOVER EFFECT OF CHARTER PROVISIONS AND BY-LAWS; AVAILABILITY OF
PREFERRED STOCK FOR ISSUANCE. The Company's Certificate of Incorporation and
By-Laws contain provisions that could discourage a proxy contest or make more
difficult the acquisition of a substantial block of the Company's Common Stock,
including provisions that allow the Board of Directors to take into account a
number of non-economic factors, such as the social, legal and other effects
upon employees, suppliers, customers and creditors, when evaluating offers for
acquisitions of the Company. Such provisions could limit the price that
investors might be willing to pay in the future for shares of the Company's
Common Stock. The Board of Directors is authorized to issue, without
stockholder approval, up to 5,000,000 shares of Preferred Stock of the Company
(the "Preferred Stock") with voting, conversion and other rights and
preferences that may be superior to the Common Stock and that could adversely
affect the voting power or other rights of the holders of Common Stock. The
issuance of Preferred Stock or of rights to purchase Preferred Stock could be
used to discourage an unsolicited acquisition proposal.
ABSENCE OF DIVIDENDS. The Company does not anticipate paying any dividends on
its Common Stock in the foreseeable future.
10
<PAGE>
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Shares
by the Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Shares as of June 30, 1996 and the number of Shares which may
be offered for the account of the Selling Stockholders or their transferees or
distributees from time to time. The shares may be offered from time to time by
any of the Selling Stockholders. Because the Selling Stockholders may sell all
or any part of their Shares pursuant to this Prospectus, no estimate can be
given as to the number of Shares that will be held by each Selling Stockholder
upon termination of this offering. The amounts set forth below are to the best
of the Company's knowledge. See "Plan of Distribution."
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY NUMBER OF SHARES WHICH MAY
SELLING STOCKHOLDER OWNED PRIOR TO OFFERING BE SOLD IN THIS OFFERING(1)
- ------------------- ----------------------------- ---------------------------
<S> <C> <C>
Ronald J. Muns 1,366,270 1,366,270
Randall Casto 118,806 118,806
David Russell 14,924 14,924
</TABLE>
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(1) Includes an aggregate of 150,000 Shares which are held in escrow pursuant
to the terms of an Escrow Agreement dated as of February 27, 1996 among
Astea, the Selling Stockholders and certain other parties (the "Escrow
Agreement"). Such Shares may not be released from escrow and sold
hereunder except in compliance with all terms and conditions of the Escrow
Agreement.
Messrs. Muns and Russell are employees of Bendata. Mr. Casto is a former
employee of Bendata.
In February 1996, the Company merged with Bendata (the "Bendata Merger"), a
provider of internal help desk software products and related services, through
the issuance of 1,500,000 shares of its Common Stock. Pursuant to the terms of
the Escrow Agreement, approximately 150,000 of the 1,500,000 shares (the
"Escrow Shares") of Common Stock issued in the Bendata Merger were placed in
escrow (the "Escrow") to satisfy indemnification claims brought by Astea
against the Selling Stockholders based on a breach of any of the
representations and warranties relating to the business of Bendata. This
Prospectus relates to the sale of the Escrow Shares solely to the extent that
such Escrow Shares are released from the Escrow in accordance with the terms
and conditions of the Escrow Agreement.
In connection with the Bendata Merger, the Company also entered into a
Registration Rights Agreement (the "Registration Rights Agreement") with the
Selling Stockholders pursuant to which the Selling Stockholders were granted
certain registration rights with respect to the 1,500,000 Shares of Common
Stock issued to the Selling Stockholders. Pursuant to the Registration
Statement of which this Prospectus is a part, the Company is fulfilling its
obligations under the terms of the Registration Rights Agreement by
registering for resale all 1,500,000 Shares that were issued to the Selling
Stockholders.
The Bendata Merger is more fully described in the Company's Current Report
on Form 8-K dated February 27, 1996, as amended, which Form 8-K is
incorporated herein by reference.
11
<PAGE>
PLAN OF DISTRIBUTION
The Shares offered hereby are being sold by the Selling Stockholders for
their own accounts. The Company will not receive any of the proceeds from this
offering.
The Shares covered by this Prospectus may be sold by the Selling Stockholders
or by their pledgees, donees, transferees or other successors in interest. Such
sales may be made at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. The Shares may be sold by one or more of the
following: (a) one or more block trades in which a broker or dealer so engaged
will attempt to sell all or a portion of the Shares held by a Selling
Stockholder as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus; and (c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. The Selling Stockholders may effect such
transactions by selling shares to or through broker-dealers, and such broker-
dealers will receive compensation in negotiated amounts in the form of
discounts, concessions, commissions or fees from the Selling Stockholders
and/or the purchasers of the shares for whom such broker-dealers may act as
agent or to whom they sell as principal, or both (which compensation to a
particular broker-dealer might be in excess of customary commissions). Such
brokers or dealers or other participating brokers or dealers and the Selling
Stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, in connection with such sales.
Any securities covered by this Prospectus that qualify for sale pursuant to
Rule 144 under the Securities Act of 1933, as amended, may be sold under Rule
144 rather than pursuant to this Prospectus.
The Company intends to maintain the effectiveness of this Prospectus for
approximately twenty-four months or such longer period as is required to
satisfy the Company's obligations under the Registration Rights Agreement with
the Selling Stockholders; provided, however, that, under certain circumstances
set forth in the Registration Rights Agreement, including, without limitation,
the Company's determination that it is in possession of material nonpublic
information that it determines in good faith it is not advisable to disclose in
a registration statement but which information would otherwise be required by
the Securities Act to be disclosed in a registration statement, then the
Company may by written notice suspend the right of the Selling Stockholders to
sell shares pursuant to this registration statement for up to 90 days.
The Registration Rights Agreement provides that the Company will indemnify
the Selling Stockholders for any losses incurred by them in connection with
actions arising from any untrue statement of a material fact in the
Registration Statement or any omission of a material fact required therein,
unless such statement or omission was made in reliance on written information
furnished to the Company by the Selling Stockholders. Similarly, such agreement
provides that each Selling Stockholder will indemnify the Company and its
officers and directors for any losses incurred by them in connection with any
actions arising from any untrue statement of material fact in the Registration
Statement or any omission of a material fact required therein, if such
statement or omission was made in reliance on written information furnished to
the Company by such Selling Stockholders. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the registrant pursuant to the
foregoing provisions, the registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
The Company will inform the Selling Stockholders that the antimanipulative
rules under the Securities and Exchange Act of 1934 (Rules 10b-5 and 10b-6) may
apply to sales in the market and will furnish upon request the Selling
Stockholders with a copy of these Rules. The Company will also inform the
Selling Stockholders of the need for delivery of copies of this Prospectus.
12
<PAGE>
LEGAL MATTERS
The issuance of the Shares will be passed upon for the Company by Testa,
Hurwitz & Thibeault, LLP, Boston, Massachusetts.
EXPERTS
The consolidated financial statements of the Company for the years ended
December 31, 1995 and 1994 incorporated by reference in this Registration
Statement have been audited by Arthur Andersen LLP, independent public
accountants. The combined financial statements of the Company for the year
ended December 31, 1993 incorporated by reference in this Registration
Statement have been audited by Shechtman, Marks, Devor & Etskovitz, P.C.,
independent public accountants. The combined financial statements of Bendata
for the year ended December 31, 1995 incorporated by reference in this
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants. The consolidated financial statements of E.L.G. Data AB
for the year ended December 31, 1995 incorporated by reference in this
Registration Statement have been audited by Price Waterhouse, independent
public accountants. The consolidated financial statements of E.L.G. Data AB
for the year ended December 31, 1994 incorporated by reference in this
Registration Statement have been audited by Ernst & Young, independent public
accountants. The financial statements referred to above are incorporated by
reference in this Registration Statement in reliance upon the authority of
said firms as experts in giving said reports.
13
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CON-
NECTION WITH THE OFFERING MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, ANY SELLING STOCKHOLDER OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE AS OF WHICH INFORMATION IS SET FORTH HEREIN.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Information Incorporated by Reference...................................... 2
Trademarks................................................................. 3
The Company................................................................ 3
Risk Factors............................................................... 4
Use of Proceeds............................................................ 11
Selling Stockholders....................................................... 11
Plan of Distribution....................................................... 12
Legal Matters.............................................................. 13
Experts.................................................................... 13
</TABLE>
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1,500,000 SHARES
ASTEA INTERNATIONAL INC.
COMMON STOCK
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PROSPECTUS
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SEPTEMBER 23, 1996
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